Exam 1 Study Guide

9/20/2014 11:59:00 AM

Session 1
o The new world of advertising and integrated brand promotion
Companies are turning to branded entertainiment, the interet,
influencer marketing,a nd other communication techqniues to
reach consumers and get their brand messages across
World of advertising is being referred to as Madison and Vine,
as Madison Avenue advertising agencies attempt to use
Hollywood entertainment industry techniqus to communicate
with consumers
In acupuncture marketing, you go narrow and deep with your
messages
Mobile marketing is communicating with target markets
through mobile devices lke smartphones
Digital and interactive techniques can funnel consumers to
retail sites and online shopping and purchasing
o Old media/new digital media Its all about the brand
Its always all about the brand
A brand that does not meet the consumers needs will
not succeeed, regardless of the advertising
o What are advertising and integrated brand promotion?
Adveritisng means different things to different people
It's a business, an art form, an institution, and a
cultural phenomenon
Sometimes it is hard-hitting and powerful, and other
times it is boring and ineffective
Can be entertaining or annoying
As a business processs it is relied on by companies to build
their brands
o Advertising defined
Advertising is a paid, mass-mediated attempt to persuade
The company that pays for the advertising is the
client/sponsor
Publicity is not advertising because its not paid for
Public service announcements are not advertising either
They look like and sound like ads but are not ads

They are not commercial in the way an ad is because

they are not paid for like an ad
They are excluded from the definition of advertising
because they are unpaid communication
PSAs often strongly imitate their commercial cousins
Adveritisg is mass mediated, meaning that it is delivered
through a communication medium designed to reach more
than one person
Television, radio, newspapers, and magazines, direct
mail, billboards, video games, the internet, ipods, and
smartphone
All advertising includesa n attempt to persuade
Communications designed to get someone to do
something
Ad informs the consumer for some purpose, and that
purpose is to et the consumer to like the brand
The three essential criteria
The communication must be paid for
The communication must be delivered to an audience

via mass media

The communication must be attempting persuasion
o Integrated brand promotion defined
Promotion si all about the brand as well
Integrated brand promotion is the process of using a wide
range of promotioanal tools working together to create
widespread brand exposure
It is a process
It is complicated and needs to be managed in an

integrated fashion
It uses a wide range of promotional tools that have to
be evaluated and scheduled
It creates exposure for the brand
There are some prominent tools that marketers use for IBP
Advertising in mass media, sales promotions, point of
purchase advertising, direct marketing, personal selling,

internet advertising, social networks, podcasting, event

sponsorships
All of the toosl need to work together and have to be
integrated to create a consitstent and compelling impression
of the brand
They all have to send the same message
o Advertisements, Advertising Campaigns, and Integrated Brand
Promotion
An advertisement is a specific message that an organization
has created in order to persuade an audience

An advertising campaign is a series of coordinated

advertisements that communicate a reasonably cohesive and
integrated theme about a brand
Can be developed around a single advertisement placed
in multiple media or can be made up of several different
advertisements with a similar look fell and message
Most individual ads would make little sense without the
knowledge that audience members have accumulated from
previous ads for a particular brand

Interepreted by each consumer through their personal

experiences with a brand and having viewed previous
ads
IBP is the use of many promotional tools, including
advertising, in a coordinated manner to build and maintain
brand awareness, identity, and preference
o A focus on advertising
The marketer that does not use advertising and IBP as a way
to build brand exposure and meaning for consumers will be
ignored
o Advertising as a communication process
o A model of mass-mediated communication
Adveritising occurs through a medium
A contemporary modelshows it ias a process where people,
institutions, and messages interact
Has two major components
Production and reception

Between these two components are the

mediating/interpretation processes of accommodation and
negotiation
In production, the content of the mass communication is
created
Accommodation and negotiation are the ways in which
consumers interpret ads
Individual audience members have some ideas about
how the company wants them to interpret the ad
Each consumer has needs, agenda,s nad preferred
interpretations based on history, experience, and value
systems
Oftentimes the progression of consumer receipt and
interpretation of a communication is incompatible with the
way the company wants the consumers to see the ads
The receives must accommodate their perceived
multiple meanings and personal agendas and then
negotiate a meaning or interpretation of the ad
according to their individual life experiences and value

systems
Communication is therefore inherently a social process
What any message means to a given consumer is a
function of the inherently social being responding t o
what they know
No ad contains a single meaning for all audience members
Sessions 2 and 3
o Audiences for advertising
An audience is a group of individuals who receive and

interpret messages sent from companies or organizations

A target audience is a particular group of consumers singled
out by an organization for an advertising or IBP campaign
The firm has discovered that they like the product
category and might prefer their particular brand within
that product category

They are always potential audiences because the

company can never be usre that the message will get
through to them as intended
o Audience categories
Household consumers are the most conspicuous int hat most
mass media advertising is directed at them
Very fine audience distinctions can be made by
advertisers under the heading of consumer advertising
Members of business organizations
Focus of advertising for firms that produce business and

industrial goods and services

These products often require personal selling, but
advertising is used to create awareness and a favorable
attitude among potential buyers
Members of a trade channel
Include retailers, wholesaler, and distributors
Target audience for producesr of household and
business gods and services
The promotional tool used most often to communicate
with this group is personal selling
Professionals are doctors, lawyers, accountants, teachers, or
any toher professional grpu that has special training or
certification
Members have specialized needs and interests
Language and images rely on more esteric terminology
and unique circumstances that members of professions
readily recognize
Commonly carried out through trade publications

Trade journals are magazines published specifically for

members of a trade and carry highly technical articles
Government officials and employees
An audience in themselves due to the large dollar
volume of buying that the federal, stat, ena dlocal
governments do
Dominated by direct mail, catalogs, and web advertising
o Audience geography

Audiences can be broken down by geographic location

If an ad is used worldwide with only minor changes it is called
global advertising
These are brands that are considered citizens of the
world and whose manner of use doews not vary
tremendously y culture
Try to develop pand place advertisements with a
common theme and presentation in all markets around
the world
International advertising

Occurs when firms prepare and place different

advertising in different national markets outside their
home market
Each international market may require unique
advertising due to product adaptations or essage
appeals tailored for that market
National advertising
Reaches all geographic area of a single nation
Intenraitonal advertising uses many different national
advertising efforts
Regional advertising
Carried out by producers, wholesalers, distributors, and
retailers that concentrate their efforst in a large, but not
geographical region
Local advertising iss similar to regional advertising, but
limited to a single trading area such as a city or state
Sometimes national companies will share advertising
expenses ina market with local dealers to achieve specific

advertising objectives
Sharing of advertising expenses between national
companies and local merchants is cooperatie advertising
o Advertising as a business process
Advertigins is a basic business tool that is essential to
retaining current customers and attracting new consumers
o The role of advertising in marketing

Realize that every organization must make marketing

decisions
The role of advertising relates to four important aspects of the
marketing process
Contributing to the marketing mix
Developing nd managing the brand
Achieving effective market segmentation,
differentiatation, and positioning
And contributing to revenue and profit generation
o The role of advertising ins the marketing mix

Advertising is one of the primary marketing tools available to

any organization
Marketing is the process of planning and executing the
conception, pricing, promotion, and distribution of ideas,
goods, and services, to create exchanges that satisfy
individual and organizational objectives
The mix of these components results int eh overall
marketing program for a brand
Advertising is only one of the major areas of marketing
responsibility and only one of the many different BIP tools
relied on in the marketing mix
The role of advertising in the marketing mix is to focus on
communicating to a target audience the value a brand has to
offer
Value constsits of more than the tangible aspects of the
brand itself
Convenient location, credit terms, warranties and
guarantes, and delivery

Emotional values such as security, belonging, affiliation,

excitement, and prestige can also be pursued in the
brand choice
A firms advertising effort must be consistent with and
complmement the overall marketing mix strategy being used
by a firm
o The role of advertising in brand management

A brand is a name, term, sign, symbol, or any other features

that identifies one sellers good or service as distinct from
those of other sellers
A brand is in many ways the most precious business asset
owned by a firm
Often the brand name is worth a lot more than the
annual sales of the brand
Advertising affects brand development and management in
five important ways
Information and persuasion

o Target audiences learn about a brands features

and benefits through the message content of
advertiisn and other promotional tools
o Advertising has the best capability to inform or
persuade target audiences about the values a
brand has to ofer
Introduction of new brand or brand extensions
o New brand sare often crticically dependent on
advertising
o A brand extension is an adaptation of an existing
brand into a new product area
Advertising and IBP play a key role in
attracting attention to the brand such that
managers should favor the brand extensiosn
with a greater allocation of the ad budget
Building and maintaining brand loyalty among
consumers
o Brand loyalty occurs when a consumer repeatedly
purcases the same brand to the exclusion of
competitors brands
o Advertising reminds consumers of the values
tangible and intangible fo the brand
o Often provide an extra incentive to consumers to
remain brand loyal
o When a firm creates and maintains positive
assocaitions with the brand in the mind of

consumers and builds brand loyalty, then the firm

develops brand equity
o Brand equity is the set of brand assets linked to a
brand, its name and symbol
Creating n image and meaning for a brand
o Advertigins can communicate how a brand can
fulfill needs and desires and therefore plays an
important role in attracting customers to brands
that appea to be useful and satisfying
Building and maintaining brand loyalty within the trade
o Wholesalers, retailers, distributors, and brokers
will also favor one brand over the other given the
proper support from a manufacturer
o Trade buyers can be key to the success of new
brands or brand extensions

Session 4
o The role of advertising in market segmentation, differentiation, and
positioning
Market segmentation is the process of breaking down a large,
widely varied market into submarkets, or segments, that are
more similar than dissimilar in terms of consumer
characteritsics that consumers look for
Consumers differ in their wants and the wants of one
person can differ under various circumstances
Markets are often segmented on characteristics of
consumers both in terms of demographics or
psychographics
Advertising is to develop messages that appeal to those

different segments
Differentiation is the process of creating a perceived
difference in the mind of the consumer between an
organizations brand and the competitions
The differences can be tangible or on style or image
factors
If consumers do not perceive a diference, whether it is
real or not does not matter

Ads may emphasize performance features or create

distinctive image for the brand
Positioning is the process of designing a brand so that it can
occupy a distinct and valued place in the target consumers
mind relative to other brands
This is communicating through advertising
Depends on the perceived image of tangible or
intangible features
Consumers create a perceptual space in their minds for
brands they might consider peurhcasing

A firm must decide on the external position for the

brand
o The niche the brand will puruse relative to the
competitive brands on the market
Internal position must be achived with regard to the
other similar brands the firm itself makes
Effective internatl positioning is accomplished by either
dveveloping vastly different products within the firms
own product lines or creating advertising messages that

appeal to different consumer needs and desires

o The role of advertising in contributing to revenue and profit
generation
There are some who believe that the fundamentsl purpose of
marketing and advertising is to generate revenue
Marketing is the only part of an organization that has
revenue generation as its primary purpose
Advertising communication highlights a brandfs features and
attracts a target market

Advertising makes a direct contribution to the

marketing goal of revenue generation
Advertising cannot be solely responsible for creating
sales and revenue
The effect on profit comes about when advertising gives an
organization greater flexibility in the price it charges for a
product or service

Pricing flexibility can be achieved by contributing to

economies of scale and helping create inelasticity of
demand to price changes
When the quantity of product is increased, economies fo scale
lead to lower unit production costs
Fixed costs are spread overa greater number of units
produced
Lower fixed costs allow for higher profits per unit
Brand loyalty and advertising create another economic effect
When consumers are brand loyal, they are less sensitive to

price increases for the brand

This is the inelasticity of demand
Firms have the ability to maintain higher prices and
increase profit margins
o Types of advertising
o Primary versus selective demand stimulation
In primary demand stimulation, a company would be trying to
create demand for an entire product category
Challenging and costly, and has an impact only for
totally new products on the market, not brand
extensions or categories that have existed for a long
time
Selective demand stimulation is where the advertiser
functions to stimulate demand for a particular companys
brand
Purpose is to point out a brands unique benefits
compared to the competition
o Direct versus delayed response advertising

Direct response asks consumers to act immediately

Used for pducts that consumersa re familiar with that
do not require inspection at the point of purchase and
are relatively low cost
Delayed response advertising relies on imagery and message
themes that emphasize the benefits and satisfying
characteristics of a brand

Develops awareness and preference for a brand over

time
Most ads on TV and in magaznes are delayed response
Corporate versus brand advertiseing
Corporate is means to create favorable attitude
towards a company as a whole
Brand advertising communicates the specific features,
values, and benefits of a particular brand offered for
sale by a particular organization
When corporate advertising takes place in a trade channel, it
is institutional advertising
This is when retailers like home depot and walmart
advertise to persuade consumers to shop at their stores

Session 5
o The rise of advertising
Advertising is a product of modern times and modern media
Advertising came into being as a result of at least four major
factors
The rise of capitalism
The industrial revolution
Branding
The rise of modern mass media
o The rise of capitalism
Capitalism warrants that organizations compete for resources
ina free market environment
An individual organization has to sitmulate demand to attract
capital
Demand is stimulated by advertising
o The industrial revolution
Economic force that yielded the need for advertising
Took western societies away from household self=sufficiency
as a method of fulfilling material needs to dependency
Basic force beind the rapid increase in mass produced goods
that required stimulation fo demand

A revolution in transportation began the distribution network

needed to move the mass quantities of goods for which
adveritisng would help stimulate demand
The principle of limited liability in the 1840s restricted an
investors risk in a business venture to only their shares in a
corporate rathe than all the personal asets
Rapid population growth and urbanization occurred
The increase in the size of cities and modernity gave rise to
urbanism and advertiing
o The emergence of modern branding

Manfuacturers had to develop brand names so that

consumers could focus their attention on a clearly identified
item
Began branding previously unmarked commodities
Branding gave marketing power over retailers so that they
would have to provide the right brands
o The rise of modern mass media
The invention of the telegraph set a communication revolution
in motion

The telegraph helped engender a sense of national identity

Many new magazines designed for larger and less privileged
audidences made magazines a viable mass advertising
medium
For the most part, mass media are supported by advertising
o The eras of advertising
o The preindustrialization era (pre-1800)
Printed advertisements appeard in newsbooks
Messages were informational in nature and appeared on the

last pages of the tabloid

The Pennsylvania gazette printed advertisements and was the
first newspaper to separate ads with blank lines, making them
easier to read and more prominent
Advertisements were dominated by simpe announcements by
skilled laborers
o The era of industrialization (1800 to 1875)
A middle class was beginning to emerge

Had the economic means to consume and was

concentrated in cities
Circulation of the dailies were estimated at 1 million copies
per day
The first advertising agent opened shop in Philadelphia and
worked for newspapres by soliciting orders for advertising nd
collecting payment from advertisers
Newspaper advertising volume soared
Expansion of newspaper circulation occurred due to railroads
and growing urban centesr

There were virtually no laws or regulations to restrict

advertisers for saying anything
Could lie, deceive, and otherwise cheat with lttel or no
threat of being punished by government
Advertising was commonly considered an embarrassment by
many segments of society
Firms risked their credit ratings if they used advertising
because it was a sign of financial weakness
o The P.T. Barnum Era (1875 to 1918)

Shortly after the civil war in the US, modern advertising

began
Advertising ushered in what became knkown as the consumer
culture, or a way of life centered on consumption
Advertising became a full fledged industry int his period
Several of the founders of this industry had fathers who were
ministers
Advertising was otivated by the need to sell the vastly
increased supply of godos brought on by mass production and
by the demands of an increasingly urban population seeking
social identity through branded products
Consumers are willing to pay more money for brands
than unmarked commodities
Even if they are otherwise identical
Advertising was completely unregulated until the Pure Food
and Drug Act of 1906

This required manufacturers to list the active

ingredients of their products on their label
Direct effect was minimal, advertisers could still say just
about anything
Tone and spirit of this era was given by PT Barnum, who
claimed theres a sucker born every minute
Ads of the period were bold, carnivalesque, garish, and
full of dense copy that hurled incredible claims at
prototype modern consumers
These ads had several similarities

There was lots of copy

The prominence of the product itself and a relative lack
of real-world context in which the product was
consumed
They were usually small and had little color
Few photographs,a nd much hyperbole
This was a period of rapid urbanization, labor unrest, massive
imigraoitn,a nd concenrs about the abuses of capitliasm
It was the age of suffrage, the progressive movement,

motion pictures, and mass culture

Advertising was there to offer solutions ot the stresses
of modern life
Social and cultural change open up opportunities for
advertisers
o The 1920s (1918 to 1929)
After WWI, advertising found respectability, fame, and
glamour
Ad agencies were where the young, smart, and sophisticated

worked and played

Institutional freedom reigned
Ad agency learned during the war that donating time and
personnel to the common good is good civis and smart
business
They were generally prosperous times where most enjyed a
previously unequaled standard of living

Public pleasure was a lesser sin and there was a social

experiment in the joys of consumption
There was some more open sexuality and a love affair
with modernity
Advertigins gave people permission to enjoy
Ads of the era exhorted consumers to have a good timea nd
showed them how to do it
Being a consumer became synonymous with being a
citizen
Advertising instructed consumers how to be thoroulhy modern
and how to avoid the pitfalls of the new age
There was a product with a cure for almost any social
anxiety and personal failing
Modern canned food replaced fresh fruit and vegetables
A seemingly endless consumption chains was created
Needs led to products, new needs are created by
product side effects, newer products solve newer neds,
and on
This chain of needs is essential to the capitalist
economy, which has to expand in order to survive
Emphaseized modern themes such as the division between
the public workspace, the male domain of the office, and the
private feminine space of the home
Two separate consumption domains were created
Advertisers mostly marketed to he women, because thy
were responsible for 80% of the household purchases
Science and technology were the new religions of the modern
era

Ads appealed to the popularity of science in virtually all

product categories
Style of the ads was more visual than in the past
Showed slices of life, or snapshots of social lie
The relative position, background, and dress of the
people using theh product were carefully crafted

Visual lessons were about how to fit in with the smart

crowd, to be urbane and odern, and not fall victim to
the peris of the fast paced modern world
Slice of life was powerful because of the social nature and
ability to place brands in a social setting in which ongoing
social tensions and cultural contraindications can be resolved
by purchans the grand
Advertising began regularly constructing social-material
relationships between people nad products by depicting the
social settings and circumstnaces into which people and

things fit
Ads thatdemonstrated a product in a social context that works
for advertisers and consumers thrived
It soothed anxieties, resolved tensions, and
contradictions
Walter Thompson advertising agency was the dominant
agency of the period
o The depression (1929 to 1941)
It was brutal, crushing, and mean

The great depression forever changed the way people thought

about a lot of things
Advertising became suspect
It was part of big business, big greed, and big lust
Something that had tempted or seduced people into the
excesses for which they wer being punished
Advertisers created a tough, no-frills advertising style
There wa harsher, more cluttered, inappropriately sexual, and
often egregiously unethical advertising

Agencies crammed lots of image and copy into small

space
Used obviously inappropriate sex applea
They played on the anxieties and vulnerabilities of
troubled people
The ads leveraged the social disrptions and cultural
cotradictions of the time

This type of advertising made the relationship between

the public and advertising worse, by hurting
advertisings image
Themes in advertisements traded on axnxieties of the day
A notable event was the emergence of radio as a significant
advertising medium
Numbe of radio stations and set rose considerably
The radio was able to create a sense of community in
which people thousands of miles apart listened to and
became involved in their soap operas

It ushered in the idea of broadcasting, and socialized

consumers to depend on a connection to distanct
characters, programs, brands, and the idea that there
were other people out there that shared the connection
Agencies cut salaries and forced staff to cut hours
Clients demanded frequent review of work, and
agencies were compelled to provide more free services
to keep accounts
Ad agencies would never again reach their pre-depression
cultural status
The Wheeler-Lea amendments to the federal trade
commission act declared that deceptive acts of commerce
were against the law
Individual advertisers could be held liable for deceptive
practices
Government agenices soon used their new powers against a
few national advertisers

Session 7
o World War II and the 1950s (1942 to 1960)
The end of the great depression came with the beginning of
the war
Advertising often made a direct reference to the war effort
Linked the advertised brand with patriotism, helping
rehabilitate the tarnished image of advertising
Helps to rehabilitte the image of advertising
War got women to join the workforce in nontraditional roles

Eonomy continued to mrpove and consumption spree

increased agin
First shopping malls were built in the uburbs
Public sentiment towards advertising itself was fundamentally
different from what it had been in the 1920s
It was more negative, more skeptical, and assumed
that it was very powerful
Belief that successful propaganda experts at the war
department moved to Madison avenue to manipulate
consumer minds
There was concern about the rise of communism and its use
of mind control
There was a fear of communism
The 50s were about fear, and advertisers leveraged the
disruption
Fearful people were coaxed into buying anything that
made them feel more secure
The fear of being manipulated by modern science nad mind
control made them wary of advertising
Stories circulated that advertising agencies were doing
motivation research and using the psychological sell
Americans were fearing that they were being seduced by
subliminal advertising
James Vicary was the pioneer of this, but it was never
proved to be true
The 50s were also about sex in a paradoxical and conflicting
way
They were about conformity, chastity, the nuclear
family, and strict gender roles and social norms
It was also the time of pop psychology and films dripping with
innuendo and titillation
Sexual desire was everywhere, with the countervailing
message of chastity for women, boys will be boys for young
men
Double standards for adult sexual behavior was
common

The kids were advertised to with a singular focus and force

that was never seen before, and then the teen ad targets
There was the rise of television, which advertisers did not
know what to do with at first
Produced two to three minute demonstration
commercials
Technological change was a national obsession
Television, telephone, washer and dryer became
ommon to the American lifestyle
There was an uneasy faith in science, rigid gender roles, while

the rumblings of the sexual revolution were just around the

corner
o Peace, Love, and the Creative Revolution (1960 to 1972)
Advertising was slow to respond to the massive social
revolution going on around it
There was civil rights, the Vietnam war, the sexual revolution,
and the youth revolution
Advertising remained a fairly conservative capitalist
institution

The creative revolution was characterized by the creative

having a bigger say in the management of their agencies and
the look and feel of the ads
The look of the advertising was at first clean and minimalist,
with a simple copy and sense of self-effacing humor
Advertising became self-aware
It admitted being advertising and conveyed the
sentiment
Began to trade on insider status and played on a sense
of irony, making it occasionally hip
Advertising began to understand that it was all about hip, cool,
youth, andrebellino
Plenty of the ads still reflected traditional values and relied on
relatively worn executions
Pepsi might have taken advantage of these disruptions better
than any other advertiser

This was a period where advertising became generally aware

of its own role in consumer culture
Advertising had become symbol of consumption itself
Advertisers learned that people play out their revolutionary
impulse through consumption
Advertising learned to hide in plain site
Since the 1960s, nothing in advertising has really been new,
just another branded faux-revolution
o The 1970s (1973 to 1980)
It was a time of excess and self-induced numbness

The age of polyester, disco, blow, and driving 55

It was Americas age of self-doubt
Advertising retreated slightly from the creative revoltution
They took the sexual sell a bit further, seemed a little less
artistic, were a bit more racially integrated, and used a bit
more hard-sell
There was a second wave of American feminism, self-doubt of
western democracies, and a significant mas
identity/authenticity question
Society was telling people that it was not only OK to be selfish,
but that it was the right thing to do
Meant self-indulgence, self-gifting, and buying stuff
There was added protection for special audiences
There was concnern over what effect advertising was having
on children
The Action for Childrens Television lobbied the
government to limit the amount and content of
advertising directed at children
The FTC and the National Advertising Review Board
demanded higher standards of honesty and disclosure from
the advertising industry
Product/show blends for toys made regulation a bit more
difficult
Several firms were subjected to legislative mandates and
fines because their advertising was judged to be misleading
The industry remained very white

Specialty agencies emerged for serving various ethnic

groups
The idea was that we dont have to be the same to be
equal; celebrate the differences while not shying away
for demanding the rights
Signaled a period of growth in communications technology
There was the VCR, cable television, the laserdisc
Advertisers learned how to reach more specific audiences
through the diversity of programming on cable systems
The youth undercurrent was more cynical and ambivalent
about consumption and advertising

Session 8
o The economic effects of advertising
o Advertisings effect on Gross Domestic Product
GDP is a measure of the total value of goods and servives
produced within an economic system
Advertising contributes to the marketing mix strategy, so it
can contribute to slaes along with theright product, the right
price, and the right distribution
Advertising can contribute to levels of overall consumer
demand when it helps introduce new products, which fuels
retail sales, housing starts, and corporate investment in
finished goods and capital equipment
o Advertisings effect on competition
Advertising is alleged to stimulate competition and therefore
motivate firms to strive for better products, methods, and
competitive advantages
Amount of adveritising dollars needed to compete effectively

in many industris is often prohibitive, and advertising can act

as a barrier to entry into an industry
o Advertisings effect on prices
There is no consistent and predicatble relationship between
advertising spending and sales
The cost of advertising is built into prouct costs, which may
be ultimately passed on to consumers
There are some cost savings

There is reduced time and effort a consumer has to

spend in searching for a product or service
Economies of scale have a direct impact on cost and
prices
o Advertisings effect on value
Value refers to a perception by consumers that a brand
provides satisfaction beyond the cost incurred to obtain that
brand
Value can be added by advertising
Symbolic value refers to what a product or service means to
consumers in a nonliteral way
Social meaning refers to what a product or service means in a
societal context
Social class is marked by any number of products
Advertising contributes directly to consumers perception of
the value of the brand
o From advertising to integrated marketing communications to
integrated brand promotion
The concept of mixing various promotional tools was referred
to as integrated marketing communications
IMC emphasizes the communication effort per se and the
need for coorindated and synergistic messages
IBP retains the emphasis on coordinartion and synergy of
communication but goes beyond the paramaters of IMC
The emphasis s on the brand and not just the
communication
o Advertising and Promotion Agencies
o Advertising agencies

An organization of professionals who provide creative and

business services to clients in planning, preparing, and
placing advertisements
Agencies house a collection of professionals with very
specialized talent, experience, and expertise
Can be global businesses as well
Some ad agencies can provide advertisers with a host of
services

Full-service agencies
Includes an array of advertising professionals to meet
all the promotional needs of clients
Will often offer a client global contacts
Can be smaller shops with just a few dozen employees
that serve big clients
Creative boutiques
Typically emphasizes creative concept development,
copywriting, and artistic services to clients
Fast, flashy, fee-based idea factories

Their greatest advantage, being niche expertise might

be their biggest liability
Digital/interactive agencies
Help advertisers prepare communications for new media
such as the internet, mobile marketing, and interactive
television
Focus on ways to use the internet for direct marketing
and target market communications
A virtual agency is a wwebsite where users pay a flat
fee to make their own TV, print, radio or interactive
eads
In-house agencies
Often referred to as the advertising department in a
firm and takes responsibility for the planning and
preparation of advertising mateiras
Have greater coordination and control in all phase of the
advertising and promotions process
The firm essentially keeps all the profits from
commissions that an external agency ould have earned
There may be a lack of objectivity and it is unlikely that
they could ever match the breadth and depth of talent
in an external agency
Media specialists
Organizations that specialize in buying media time and
space and offer media strategy consulting to advertising
agencies and advertisers

Since they buy media in large quantites, they acquire

media time at a much lower cost than an agency or
advertiser could
Often have time and space in ninventory and can offer
last-minute placement to advertisers

Session 9
o Agency services
Advertiser may need a large, global, full-service advertising
agency to plan, prepare, and execut its advertising and IBP
campaigns

Or a creative boutique or digital/interactive agency

might be the right combination
The advertiser and gagency have to negotiate to reach an
agreemtent on the services being provided before any agency
is hired
Agencies have in recent years been exposed to economic
downturns
o Account services
These are people like account executives, account anagers,

who work with clients to determine how the brand can benefit
most from advertising and IBP
Account services entail identifyin ghte benefits a brand offers,
its target audiences, and the best ompetitive positioning, and
then developing a complete plan
Can sometimes provide basic marketing and consumer
behavior research
Account services managers also work with the client in
translating cultural and consumer values into advertising and

promotional messages through the creative services in the

agency
They work with media services to develop an effective media
strategy for determining the best vehicles of reaching the
targeted audiences
They keep the various agency teams creative, production,
and media on schedule and within budge
o Marketing research services

Research conducted usually consists of the agency locating

studies that have a bearing on a clients market or advertising
and IBP objectives
Many agencies have established the position of account
planner to coordinate the research effort
An account planners stature in the organization is on part
with e account executive
They are assigned to clients to ensure that research
input is included at each stage of development of
campaign materials

Session 10
o Creative and production services
Creative services groups come up with the conepts that
express the value of a companys brand in interesting and
memorable ways
They devlelop the message that will be delivered through
advertising, sales promotion, direct marketing, social
networks ,mobile marketing, event sponsorhip, or public
relations
Production services include producers who take creative ideas
and turn them into advertisements and other materials
o Media planning and buying services
Advertising agencies provide media planning and buying
services today similar to those osf specialized agencies
Challenge is to determine how a clients message can most
effectively and efficiently reach the target audience
o Administrative services
Agencies have to manage their business affaris

Most important to clients is the traffic department, which

monitors that deadlines are met and monirso projects
They make sure that the creative group and media
services are coordinated so that deadlines for getting
promotional materials to printers and media
organizations are met
o Agency compensation
Often based on a commission or markup system

Clients have been demanding more servies at a lower cost

Agencies are pushing back on clients who demand a fee
structure that is lower than the cost to produce the services
o Commissions
Commission system si the traditional method of agency
compensation
Based on the amount of money the advertiser spends
on media
15% of the total amount billed by a media organization is
retained by the advertising agency as compensation for all

costs in creating advertising/promotion for the advertiser

It is slightly more expensive for outdoor media
The wisdom is being questioned because it causes agencies to
recommend more expensive forms of communication to make
more money when there may be better avenues
o Markup charges
Could add a markup charge to a variety of services the
agency purchases from outside suppliers
An agency then adds a markup charge fo the services that
they purchase
o Fee systems
Fee system is like that used by consulatnts or attorneys,
whereby the advertiser and agency agree on an hourly rate
for the different services provided
The hourly rate can be based on average salaries within
departments
A fixed fee or contract set for a project between the client and
the agency is another form of fee system

The agency and advertiser must agree precisely on

what services will be provided, by what departments,
over what period of time
They must agree on which supplies, materials, travel
costs, and other expensvies will be reimpused beyond
the fixed fee
o Pay-for-Results

Base the agencys fee on the achievement of agreed-on

results
Historically agencies have not used this method because
results have been narrowly defiend as sales
Key effects on slaes are related to factors outside the
agencys control like produt features, pricing strategy, and
distribution program
Results criteria are usually awareness, brand identification, or
brand features knowledge among target audiences
o External Facilitators

Organizations or individuals that provide specialized services

to advertisers and agencies
o Marketing and advertising research firms
Perform original research for advertisers using focus groups,
surveys, or experiments to assist in understanding the
potential market or consumer perceptions of a product or
service
Advertisers and agencies sek measures of promotional
program effectiveness, where these firms run recognition

tests on print advertisemetns

o Consultants
Consultans specialize in areas related to the promotional
process
A database consultant works with both advertiser and
agencies
Identify and manage databases that allow for the
development of integrated marketing communications
programs

This type of consultant specializes in website development

and management
They have creative skills to develop websites nad
corporate home pages and technical skills to advise
advertisers
The third type of consultant works with a firm to integrate
information across a wide variety of customer contacts and

organize this information to achieve customer relationship

management (CRM)
Business strategy consultants can advise on image strategy,
market research procedure, and process and account
planning
o Production facilitators
Production is an area wher advertisers and agencies rely most
heavily on external facilitators
All forms of media advertising require special expertise that
no other agency can have
Could be broadcast production, where each staffmember is
essential to preparing a professional, high-quality radio or
television ad
o Software firms
Technology and new media technology has expanded so
rapidly that a variety of sofwtware firms facilitate the process
Firms provide the kind of expertise that is so esoteric that
even the most advanced full-service or e-commerce agency
would have to seek their assistance

o Media organizations
These are the media available for placing advertising
Internet has created media organizations through which
advertisers can directly distribute their advertising amessages
Media organizations own and manage the media access to
consumers
Such as NBC and Fox
Specialty programming on cable, tightly focused direct mail,
and internet campaigns may be better ways to reach specific
audiences
Braodband allows internet users to customize their
programming by calling on only specific broadcasts from
providers
This ncludes media conglomerates because they own and
operate companies in broadcast, print, and interactive media
o Target audiences

With the exception of household consumes, they are also the

advertisers who use advertising and IBP
Business and government audiences are key to the success of
a large number of firms that sell only to business and
government buyers
Many business and trade sellers regularly need public
relations, and most use direct mail to communicate with
potential customers as a prelude to personal selling

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